Oil prices on Friday rebounded from six straight sessions in the red, benefitting from easing fears of a potential decision by Britain on Thursday to exit the EU.
The market was also buoyed by a softer greenback, which makes US dollar-denominated crude oil cheaper for buyers using other currencies.
“The risk-off trade flow of a day ago has become risk-on, at least for now,” Tim Evans at Citi Futures said as European stock markets rallied in a switch to betting that Britain will vote to remain in the EU.
US benchmark West Texas Intermediate (WTI) for next month delivery leaped US$1.77 to US$47.98 per barrel on the New York Mercantile Exchange.
In London, Brent North Sea crude for delivery in August, the global benchmark, advanced US$1.98 to US$49.17 a barrel.
However, more than a week of bumpy trade in markets rattled by fears of a pro-Brexit decision in the referendum, the price of WTI lost 2.2 percent and Brent fell 2.7 percent.
“We think crude oil will have trouble sustaining today’s rally and remains at risk for a deeper correction to the downside,” Evans said.
Gene McGillian of Tradition Energy said that prices appeared to be trading in a narrow range.
“Overall the market rally seems to have lost momentum,” McGillian said.
He cited the return of Canadian production to the market after massive wildfires and the possibility of talks between militant Nigerian groups and the government that could end attacks on oil infrastructure.
Those supply disruptions had helped push prices above US$50.
“The market is still off the 12-year lows that we saw earlier this year and that’s predicated on the fact that we’re going to see a decline of the North American production level and increase of global demand,” McGillian said.
In that context, the market seemed to shrug off this week’s rise in active US oil rigs, the third in a row reported by driller Baker Hughes on Friday.
“I’m a little reluctant to say it’s a sign that we’ve reached the threshold where North American drillers are reentering the market,” McGillian said.
PRECIOUS METALS: Gold prices hit a near two-year peak this week as investors sought the haven commodity on fresh fears Britain would vote to leave the EU in a looming referendum.
The precious metal, whose twin drivers are investment buying and jewelry demand, on Thursday surged to US$1,315.71 an ounce — the highest since August 2014.
The commodity soared as new polls showed a rise in support for Brexit ahead of next week’s referendum, adding to concerns over the global economic outlook.
With the EU referendum outcome too close to call, investors piled into safe haven investments, notably gold, the yen and German government bonds, seeking financial protection in case Britons vote to leave.
By Friday on the London Bullion Market, the price of gold stood at US$1,290.70 an ounce, from US$1,275.50 a week earlier.
Silver advanced to US$17.37 an ounce from US$17.32.
On the London Platinum and Palladium Market, platinum decreased to US$968 an ounce from US$996.
Palladium dipped to US$531 an ounce from US$554.
BASE METALS: Nickel led metals higher, climbing 2.2 percent. Copper and aluminum also rose.
The best bet among Americas mining stocks this week is the owner of a giant copper deposit in the Gobi Desert, a sign the industry is entering a new phase after years of cutbacks.
Turquoise Hill Resources Ltd surged as much as 30 percent since Monday, when reports emerged that its controlling shareholder Rio Tinto Group is looking into taking the Vancouver-based company private by increasing its stake and bringing in a partner.
Goldman Sachs Group Inc was hired to advise on the proposal, a person with knowledge of the matter said.
An intense phase of spending cuts amid plunging prices has left producers grappling for growth prospects as they look ahead to a price upswing.
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